Fannie Mae and the Federal Housing Finance Agency found themselves in the hot seat after the FHFA's Office of Inspector General said the agency is lax in overseeing Fannie's planned move to downtown Washington.
“To the best of our knowledge, [the] FHFA has not approved any of the proposed features in Fannie Mae's architectural and engineering plans nor has it reviewed or approved proposed expenditures by Fannie Mae for these features,” the OIG said.
Fannie has little incentive to save money on the build-out of the new headquarters because any positive net worth it does not spend on the project goes to the Treasury Department.
“For these reasons, we believe there are significant financial and reputational risks from the projected costs associated with Fannie Mae's relocation of its headquarters that warrant immediate, sustained comprehensive oversight from [the] FHFA, the conservator of Fannie Mae,” the OIG concluded.
Fannie is planning to consolidate its office, moving from upper Wisconsin Avenue in the nation's capital to a downtown building being constructed at the former location of the Washington Post. Fannie Mae plans to rent space in the building.
In a response to the audit, FHFA Director Mel Watt disputed the notion that it has been lax in supervising the project.
And in a set of Frequently Asked Questions, Fannie Mae said the move is in its and taxpayers' best interests.
“By selling three properties Fannie Mae owns in the District of Columbia, the company will be able to dispose of assets in a seller's market,” Fannie Mae officials said. “At the same time, Fannie Mae was able to take advantage of significant softness in the D.C. commercial rental market.”
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